Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/59353

Measuring investment opportunities using financial statement text

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Title:Measuring investment opportunities using financial statement text
Authors:Basu, Sudipta
Ma, Xinjie
Tran, Hoa
Keywords:Investment opportunities
IOS
textual analysis
Tobin’s Q
corporate policies
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Date Issued:01 Sep 2018
Abstract:We analyze 10-K texts from EDGAR during 1995-2009 to score firms’ investment opportunity sets on multiple dimensions. We identify 646 unique key words that predict future investments and group them into 62 factors. Industry-specific factors include Bio-Pharmaceutical, Banking, Information Technology, Oil & Gas and Semi-conductor, while more general factors include Impairment, Debt Intensity, Executive Employment, Preferred Stock Buyback and Capital Seeking. Our multi-dimensional measures of firms’ investment opportunities outperform Tobin’s Q and/or industry-fixed effects, in predicting out-of-sample future (2010-15) investments and related corporate policies, and even inform incrementally over lagged dependent variables.
URI:http://hdl.handle.net/10125/59353
Appears in Collections: 11 Financial: Disclosure


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